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Vintner to America? Think Warehouse

Alois Lageder, a renowned winemaker from Alto Adige in northern Italy, stood at the front of a tasting room, glancing from side to side as a group of American buyers tasted his wines. Elegantly dressed in a camel-colored check coat, he had traveled more than 200 miles to Tuscany for a 20-minute presentation. It was his chance to impress the buyers.

Most of all, it was Mr. Lageder's chance to kiss the ring of the group's leader, one of the country's most powerful wine czars: David Andrew.

Mr. Andrew, 39, does not work for Sherry-Lehmann, the prestigious wine purveyor on Madison Avenue in Manhattan, or for Zachys, the big wine seller in Scarsdale, N.Y., or even for the Wine Club, the California chain. He's the global wine director for Costco, which now claims to be America's largest wine retailer. These days, getting a wine into Costco has become the winemaker's equivalent of getting a book on the Oprah Book Club list.

Since Mr. Andrew, a former literary agent and model turned wine expert, arrived at Costco in 1998, the national warehouse club, which sells everything from bulk diapers to meat at deeply discounted prices, has zoomed into the ranks of the nation's wine elite. Wooing buyers with lower profit margins, Costco's sales of wine ballooned to more than half a billion dollars in 2001, in what the Wine Institute says is a $19.8 billion business, including retail and restaurant sales.

It isn't jug wine. Costco has become one of America's largest retailers of Veuve Clicquot Yellow Label Champagne and of Dom Pérignon, probably the most famous name in Champagne. Alongside its best-selling Kendall-Jackson chardonnay ($8.95), Costco carries top-ranked Bordeaux, noteworthy Antinori wines from Italy and $115 Opus One from Napa Valley.

''If you look at the landscape maybe 10 years ago for a large national retailer, you might find Taylor, Gallo and Almaden,'' said Erle Martin, the president of Niebaum-Coppola Estate Winery in the Napa Valley. ''They've identified a changing trend in wine buying. They're offering top-quality wines and changing the choices people make.''

Winemakers everywhere have taken note. ''For the general public, in Italy or France, it's not a familiar name,'' said Piero Antinori, the president of Antinori in Tuscany.

''But for us, we know that they are extremely important in the wine sector,'' he said.

While other large chain retailers like Sam's Club, a division of Wal-Mart Stores, have moved into the wine business, none have given wines the kind of reverence and dedication that Costco has. None have wine experts of Mr. Andrew's stature, and they are certainly not frolicking around Tuscany tasting wines, as Mr. Andrew did earlier this month when he brought a team of Costco buyers, with previous experience in the nuances of retailing, say, televisions or dog food, for training in the intricacies of wine.

When Mr. Andrew came in, Costco's focus was on the typical assortment of American wines found in run-of-the-mill stores. But he concluded that among Costco customers -- whose average age is 48 and whose median household income is $74,000, according to a study by Hebert Research Inc. -- there must be wine drinkers with potential for more sophistication and much deeper pockets.

''Wine has just become increasingly normal, and Costco is in the business of selling normalcy,'' said Matt Kramer, a columnist at Wine Spectator, a consumer magazine. A recent Deutsche Bank study found that Costco, with wine in about 230 of its 285 stores nationwide, was the fastest-growing outlet for wine among clubs.

At Costco, where members pay a $45 annual fee, no wine is marked up more than 14 percent, and some barely at all; wine stores customarily mark up as much as 50 percent.

As a result, wine retailers around the country are scrambling, with some taking desperate measures. When a regular customer at Angelbeck's, a small wine store in Upper Montclair, N.J., wanted to buy five cases of Dom Pérignon, the store sent its own delivery truck to Costco to buy it for the customer, who saved about $1,000.

Costco and other chain stores are limited by wine laws that vary from state to state. They currently do not sell wine in New York state or Connecticut but do sell it at two locations in New Jersey.

The fact that Costco hired Mr. Andrew in the first place seems unusual. In a corporate culture more Coors Light than Chianti Classico, Mr. Andrew is preparing to take his exam for the Master of Wine certification, a degree held by fewer than 20 people in America. He writes a bimonthly column on wine in The Costco Connection, a magazine that is sent to 3.5 million of its members, listing brands sold at the stores.

Sam's Club, another large chain retailer, with more than 300 outlets selling wine, has no trained oenologist on its staff, and has a much different philosophy. ''You can't be subjective,'' said Michael Rouse of Sam's Club, which does not report its sales figures. ''You need to be objective. It's more understanding what your members want to drink than telling them what they should be drinking.''

Mr. Andrew, who is from Scotland, is an unlikely wine czar. Though he began his career selling wine in London, he detoured to France, where he taught English for a year, spent several years as a model in London and Milan, and then he became a literary agent in Los Angeles.

After deciding to return to the wine business, he began studying with the Institute of Masters of Wine, a London organization where future sommeliers acquire the most intimidating bits of esoteric knowledge, and soon began ruminating over job opportunities. Through a friend who worked at Costco, he learned that the company did not have a wine expert and proposed the position.

''Why would you want to be a wine waiter when you can work at a Fortune 500 company?'' he asked. ''You have the benefit of having a great company with all of these stores, all of these warehouses all over the place, where you can really do something.''

Mr. Andrew, who speaks French and Italian, spends much of the year on the road, seeking new wines and counseling his eight regional buyers on what to stock. Mr. Andrew serves as a sort of youthful Nestor to them. ''David is our wine school,'' said Tim Rose, the senior vice president of food and fresh foods. ''We used to be really Napa Valley oriented, so our buyers knew Napa Valley. They really didn't think much outside the box.''

That is one reason Mr. Andrew took them to Tuscany this spring to learn about Italian wines. He was introducing them to the subtleties in a Chianti Classico and the beauty in a pinot nero, showing them the earth they come from, and establishing relationships with the winemakers from Antinori to Badia a Coltibuono. During the trip, some buyers tasted Orvieto Classicos for the first time, while others peppered him with questions about fruit and tannins.

One night after a long day of tasting, back at their rented villa, Mr. Andrew said over a glass of Scotch: ''I've given these guys seminars for years and nothing sticks. But to come to the place where it's made is so much different. Then they have a wine, a meal, a feeling to hang it on.''

Mr. Andrew also travels every spring to Bordeaux to taste the latest vintage and buy futures, a common practice among retailers that allows them to buy the wine at a reduced cost, betting on its success several years before it's delivered. Unlike most independent retailers, like P. J. Wines in Manhattan that requires customers to put down money ahead of time, Costco does not.

Small retailers cannot afford the narrow profit margins that Costco can. Costco in Wayne, N.J., charges $28.69 for Veuve Clicquot Yellow Label Champagne, which has a wholesale price of $28. At Astor Wines and Spirits in Greenwich Village, a large retailer, it's $29.99. But at Angelbeck's, in Upper Montclair, the price is $39.99.

But, he quickly added: ''Our basement is 57 degrees. Their warehouse is not 57 degrees. When you look at the condition of the fine wine you're buying, it's not a commodity that's easily broken down to price.''

Costco still has a way to go to match the fine wine stores, which have staffs handy to answer questions. Costco's customers are largely left to pore through the selection on their own. ''They're not building wine cellars for their customers,'' Mr. Krauter said. ''Come and get me Costco!'' he added.

If Mr. Andrew has his way with it, it just may. Costco, he said, is planning to open 30 more stores selling wine this year.